U.S.: Housing Production Falls 6.5% in May

Declines in both single- and multifamily starts pushed nationwide housing production down 6.5 percent in May to a seasonally adjusted annual rate of just over 1 million units, according to newly released figures from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

While the starts represent a decline from the April figure of 1,071,000, they are 9.4 percent above the May 2013 rate of 915,000, the report said. Single-family housing starts in May were at a rate of 625,000 -- 5.9 percent below the revised April figure of 664,000. The May rate for units in buildings with five units or more was 366,000.

Single-family permits, which can be an indicator of future building activity, rose 3.7 percent.

“The dip in single-family production shows builders continue to move carefully in adding inventory,” said Kevin Kelly, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Wilmington, Del. “They are also facing supply chain issues, such as access to lots and labor.”

“The encouraging news is that single-family permits are up by almost 4 percent,” said NAHB Chief Economist David Crowe. “The modest increase is evidence that builders expect continued release of pent-up demand and a gradual expansion of the housing market. We are still forecasting a 12 percent increase in total housing starts for the year.”

Regionally in May, combined single- and multifamily housing production fell in the Northeast, the Midwest and the West, with respective losses of 25.2 percent, 16.5 percent and 16.3 percent. Meanwhile, the South posted a 7.3 percent gain.

Issuance of building permits registered a 6.4 percent decline to a seasonally adjusted annual rate of 991,000 units in May. This was due entirely to a decrease in the multifamily sector, where permits registered a 19.5 percent loss to 372,000 units. Single-family permits increased to 619,000 units.

The Northeast and Midwest registered overall permit gains of 3.5 percent and 3.8 percent, respectively, while the South and West posted respective losses of 7.3 percent and 15.2 percent.